Handling a New Credit Card When You’ve Been Out of the Credit GameMarch 11, 2011 - 8:17 am
There are some people who abandoned all use of credit cards. Many choose this route after satisfying outstanding debts of the past. Some have chosen not to have a card in their financial life at all. Whatever the reason may be, many consumers who were once done with plastic are making a return appearance and applying for a credit card for multiple reasons.
Why a Credit Card Now?
Unfortunately, to get good credit you have to have good credit. For many consumers, a good mix of credit types and responsible usage of accounts is what makes a difference in their credit scores. Without a credit card used responsibility, many consumer credit scores will suffer. Since we all need good credit to be ensured the best financing rates and loan terms, it may become important to get back into the credit game and sign up for a good offer.
Find the Best
The credit card industry may be a lot different than when you were involved. Now there are more stringent approval criteria and different terms and rewards programs to review. It can be a full-time job just to find the right credit card for you. The first thing you need to consider is your lifestyle and how you plan to utilize your credit card for the best interest of your finances. For instance, will the card be solely for emergency purposes or will you use it regularly for gas or grocery purchases just to keep it active and reap the rewards? Once you make the determination of how best to use your new credit card, you should be able to narrow down your choice of credit cards and card issuers.
Terms and conditions on the cards should be the priority of selecting cards. Finding a decent interest rate and agreeable terms is important to selecting a card that will benefit you rather than hurt you financially. It is important that you narrow down your selection of credit card choices because applying for too many credit cards, especially at one time, can actually damage your credit score. Too many inquiries and applications for new credit will reflect to creditors you are not managing your credit life wisely.
Getting Back Into the Game
After not using credit cards for a long period of time, especially after surviving credit card debt, it can be a bit intimidating to getting back into the swing of things. You may be very cautious about how you use your card and that is fine. What will not work is letting the card sit idly in your wallet. These days inactive accounts can have their credit limits reduced or their accounts closed altogether by the card issuer. It is better to use credit cards sparingly.
Dedicate one task where your regularly use your credit card. For instance, use the card for every trip to the gas pump. Be sure to set aside the cash value for each purchase of gas so you will be guaranteed the ability to pay your credit cards off each time before the billing cycle ends. Regular use and prompt payment opens the door to better credit scores and potentially higher credit limits if needed.
Once you are able to make a few small purchases and pay off your balance, you will be able to boost your credit history and score. If you have no other need for the credit card, keep doing what you are doing to keep credit scores on track. Continue to practice good credit card management and resist the impulse to spend more than you can afford on credit. Letting history repeat itself and have debts re-accumulate is the one scenario you want to avoid so keep in mind how hard it was to overcome debts the first time and work hard to keep your financial life on track. A credit card can work to your advantage as long as you don’t take it for granted.